Have you ever wondered if some people know a smarter way to invest that you haven’t been told about? Do you feel like there’s a special backstage door guarded by a guy named Boudreaux for those who know the password and no one told you? If so, congratulations! You’re right and you’re standing at the doorway now.

Many are unaware of how the financial industry misrepresents risk, overprices protection, muddies the concept of diversification, engages in slow-motion churning, speculates through active management, and fails to disclose the true costs of investing. Many are unaware of how to be broadly diversified, manage volatility, and reduce the long-term costs of investing which typically take a far bigger bite out of earnings than investors realize. It’s not unusual for investors to pay more in fees and commissions than they made on their portfolio. Why is that? A dirty little secret we see in the financial industry, especially the brokerage industry, is how the pressure to continually produce new revenues places brokers and reps on a commission treadmill they’re afraid to step away from if they have bills to pay or a family to feed. We see how incentives are provided for reps “hitting their numbers” and reduced percentage payouts are the punishment for anything less. We often see a corporate culture that encourages reps to live at levels they can hardly afford to keep them in constant fear of not meeting sales goals. And where does this leave their unsuspecting clients?

If the traditional financial industry model is the problem, then going to someone else peddling new flavors of the same products is just more of the same. The solution is education and coaching, exposing the traps and providing a path to avoid them.

At Rainey Asset Management, Inc, our coaching paradigm is a process based on educating clients and providing a platform to help them reach their goals. Want to find out what you have been missing? Take our Investor Quiz and contact us to learn about our investor education workshops. It’s not just your portfolio or retirement plan, it’s your future!

“I feel like a fool throwing that kind of money away,” said Jesse, a retired soldier at a Milwaukee grocery store who doubled his regular weekly ticket spending to $55 for the $640 Million dollar jackpot. “But it’s a chance you take in life, with anything you do.”

Was Jesse foolish to be, in his own words, “throwing that kind of money away?” It’s true that you take “chances” in life. It’s also true that not all “chances” have the same odds of a positive outcome. If I’m standing on a treeless hill in a thunderstorm with a golf club raised high above my head, am I taking a chance with substantially greater risk than playing on a sunny day? What do you think? Are my odds of a positive outcome substantially improved because I’m taking a greater risk? What do you think?

Consider that if the Jesses of this world normally spend $27.50 each week for lottery tickets, that’s $1,430 a year. If Jesse invested the same amount in a well diversified, structured portfolio, regularly re-balanced over the same number of decades he would otherwise play the lottery, based on average historical returns, he might reasonably average 8% or more, with some years up and some down, and build a portfolio reaching $65,000 in only 20 years (say from age 45-65), $161,000 in 30 years (35-65), $370,000 in 40 years (25-65), and $820,000 in 50 years (15-65 or 25-75). If invested in a Roth IRA, the gains would be tax-free, unlike lottery winnings which are fully taxable at rates that can eat up close to half depending on the amount. And what if Jesse regularly invested more than the pocket change he felt he could afford to lose on lottery tickets?

Don’t get me wrong. I’m not against gambling on a lottery ticket for those who want to take a chance so long as buying lottery tickets is not their idea of retirement planning. For Jesse, it wasn’t; but for way too many, it is! So what are the odds of Jesse’s lottery earnings ever coming close to what he could have amassed by sensibly investing the same amount and watching his portfolio grow over time? Not even close. But the Jesses of this world don’t have time to think about that. They’re too busy buying lottery tickets. You may say, “Jesse’s retired. Why does he need to invest?” One word: inflation—many will live to be retired for more years than they ever worked. What about you? Are you saving and investing first, before buying lottery tickets? Is the way you invest based on sound investing principles or just hoping, like Jesse, that you get might lucky? Take the Investor Quiz and find out what kind of investor you are.